BoE implements measures to combat effects of Brexit.

[-DarkJesús-]

LONDON The Bank of England today took drastic measures to combat the effects of the Brexit vote in the referendum on June 23 with a rate cut to a record low of 0.25% and an extension of its economic stimulus program .

 

The BoE satisfy the markets by announcing the expected reduction in interest rates, which had been at 0.5% since March 2009, when then fell to the lowest level to combat the global financial crisis, Efe quoted.

This program, which was also introduced in 2009, was frozen in November 2012 in its initial allocation of 375,000 million pounds (447,000 million euros).

 

In addition, the institution surprised by introducing a package of stimulus measures greater than expected, which is valued as a whole at 170,000 million pounds (200,000 million euros).

The announcement of these initiatives, which respond to a slowdown in the national economy following the consultation on the European Union (EU), caused the automatic fall of the pound, which fell 1.28% against the dollar and 1.06% with the euro, and the rise of the London Stock Exchange, which gained 1.52% to 6735.20 integers.

In explaining the decisions of the monetary policy committee, the governor of the Bank of England, Mark Carney, said that is not expected that the UK will fall into recession, as predicted by some analysts, but "very little growth" is expected in the second half of this year.

The rate cut announced today benefits credit and real estate market, but hurt savings and pension plans and put downward pressure on sterling, which after the Brexit support depreciated to its lowest level since 1985

Thus, the central bank lowered its forecast for growth in gross domestic product (GDP) in 2017 from 2.3% predicted in May to 0.8%, the largest downward revision from predictions that began in 1992.

The forecast for 2016 remains unchanged at 2%, due to the good performance of the British economy in the first half of this year, and the outlook for growth in 2018 from 2.3 to 1.8% discount.

The company also expects that unemployment will increase next year to 5.4% and to 5.6% in 2018, while inflation, currently at 0.5%, tend upward by rising prices imports due to the depreciation of the pound.

The economic stimulus plan announced today includes an additional extension of the current program of quantitative easing, to 60,000 million pounds will go (71,000 million euros) to a total of 435.000 million pounds (515,000 million euros).

This program, which was also introduced in 2009, was frozen in November 2012 in its initial allocation of 375,000 million pounds (447,000 million euros).

In addition to this mechanism buying debt bonds, the Bank of England now invest 10,000 million pounds (11,800 million euros) more corporate debt, with the same aim of providing liquidity to encourage credit.

Carney specified that only buy debt of companies "make a substantive contribution to the economy" in the UK.

Moreover, the issuer shall make available to banks 100,000 million pounds (118,000 million euros) low-interest so that they continue to lend money to businesses and households despite the decline in profitability for the reduction of The types.

Economy Minister, Conservative Philip Hammond, welcomed the decisions of the monetary policy committee and promised to take necessary measures "to support the economy and promote confidence.

Hammond acknowledged that the vote to leave the EU "has created a period of uncertainty will continue a period of adjustment until our new relationship with the EU is clarified and the economy to adjust."

"The governor and I are necessary to support the economy at the beginning of this new phase and address the challenges we face tools," he added the minister, who has already indicated that it can introduce fiscal reforms before the end of the year.

The rate cut announced today benefits credit and real estate market, but hurt savings and pension plans and put downward pressure on sterling, which after the Brexit support depreciated to its lowest level since 1985.